Mr. Speaker, Canadians understand intuitively when a finance minister rises to speak that his hand goes into their pockets at the same time.

Employment insurance premiums currently take in over $5 billion more than is paid out in benefits. It is nothing more than a federal payroll surtax. Canada pension plan premiums will be increased 69 per cent because the plan is seriously flawed.

To limit job killing regressive payroll taxes, will the government limit increases in Canada pension plan premiums to a corresponding reduction in employment insurance premiums?

Mr. Speaker, perhaps the hon. member did not notice that my hand went into my own pocket.

Reform is advocating a $3.5 billion cut in the CHST. It is advocating cuts in equalization. It is saying that it wants to withdraw moneys currently given to Canadians, in particular middle income Canadians. It wants to take it away from them. Our goal is to maintain the services that Canadians require for their livelihood.

Mr. Speaker, I am tabling draft legislation to establish the Canada Pension Plan Investment Board and to amend the Canada pension plan, the Old Age Security Act, and to make consequential amendments to other acts.

Mr. Speaker, today it is my privilege to table draft legislation that secures the future of the Canada pension plan. These measures are the result of the review of the Canada pension plan which the federal and provincial governments have conducted over the past year.

As joint stewards with the provinces, we are obliged to do all we can to make sure that the plan is there for Canadians, those who retire and those workers who become disabled during their careers. We believe that Canadians should be able to count on Canada pension plan benefits and that is why we have worked so hard to make sure that they can.

The problems facing the CPP are fundamental. The chief actuary of the plan has shown that, without changes, the CPP fund will run out of money in less than 20 years. Without changes, contribution rates would have to increase from under 6 per cent today to over 14 per cent to cover escalating costs.

In other words, younger generations would have to pay more than twice as much as now-and get no more for it. This is not fair. This is not affordable.

The problem, quite simply, is that the Canada pension plan, as it is now, is not sustainable in the longer term at costs which are fair to future generations of Canadians. This has led some to say that we should dismantle the CPP.

Let me say unequivocally that neither the federal government nor the provinces believe that anyone would be well served by that. Nor do Canadians. They told us during the public consultations that we and the provinces held across the country last spring that they want the Canada pension plan preserved.

Canadians asked their government: first, to preserve it; second, to strengthen its financing; third, to improve the fund's investment practices and reduce its costs. In other words, they said not tinker with the CPP. Make sure it is there for us. That is exactly what we have done.

The options we have considered in the course of our review required difficult choices, but we have come up with a strong and balanced package that will ensure the Canada pension plan is there when Canadians need it. We have done this in a way that has preserved a number of important features Canadians asked us specifically to protect.

All retired pensioners or anyone over the age of 65 as of December 31, 1997 are not affected by the proposed changes. Anyone currently receiving disability benefits, survivor benefits or combined benefits is also not affected. All benefits under the Canada pension plan will remain fully indexed to inflation. The ages of retirement, early, normal or late, remain unchanged.

Let me outline what has been done. The agreement makes a fundamental change in the financing of the plan. It would move from pay as you go to fuller funding to build a much larger reserve. The fund now is equivalent in value to about two years of benefits and is declining. With fuller funding, it will grow to about five years of benefits. It will be invested in a diversified portfolio of securities to earn higher returns and to help pay for benefits as Canada's population ages.

Canadians also told us to stop giving governments exclusive access to CPP funds. We have done that. Governments have agreed to limit their access and to pay interest at market rates. Canadians told us we should not allow contribution rates to go over 10 per cent. We heard them.

Contribution rates will rise over the next six years to 9.9 per cent and remain steady thereafter. This is far less than the projected rate of over 14 per cent that the chief actuary said would have been required if these changes had not been made.

Several measures have made it possible to keep contribution rates to 9.9 per cent. Let me mention a number of them. The year's basic exemption, the first $3,500 of earnings on which no CPP contributions are paid, will remain at the current level. Retirement pensions will be calculated on the five year average of the year's maximum pensionable earnings at the time of retirement instead of the three year average. The administration of disability benefits is being improved to ensure that benefits go only to those who are eligible under the legislation.

Retirement pensions for disability beneficiaries will be based on maximum pensionable earnings at the time of disablement and then indexed to age 65 by prices instead of wages.

New rules will be used to calculate combined pensions for people receiving both disability and survivor benefits, or retirement and survivor benefits. The death benefit will provide 6 months of retirement pension to a maximum of $2,500.

A stronger labour force attachment text will be required to obtain disability coverage-contributions will be required in 4 out of the last 6 years prior to claiming benefits.

These proposed changes are moderate and balanced. They will slow the growth of escalating costs. However, Canadians told us to go easy on changes to benefits and we have.

Finally, Canadians told us to treat them like members of a pension plan. We are going to do that. Public accountability will be strengthened. Canadians will receive annual reports on their CPP accounts as soon as possible and federal-provincial reviews will be required every three years rather than every five years.

With the exception of a small additional increase in the contribution rate for 1997, these proposed changes will come into effect in 1998 once legislation is passed.

The changes to secure the CPP are supported by the federal government and the provinces of Newfoundland, Nova Scotia, New Brunswick, Prince Edward Island, Quebec, Ontario, Manitoba and Alberta and the Northwest Territories.

We regret that we were unable to get unanimous support, and that two provinces felt they were unable to join the agreement. However, the requirement to achieve the support of two-thirds of the provinces with two-thirds of the population has been met.

It is fair to say that all the options to secure the CPP had a fair hearing. Some were introduced, however, after the public consultations were over. The door is open to those ideas, along with several important issues that were beyond the scope of this review.

Let me emphasize, our first goal was to assure the fundamental security of the Canada pension plan and we have done that. This is something with which governments have failed to come to grips for over a decade.

We are now in a position to begin discussing other issues and we will do so as soon as possible. They include adding mandatory credit splitting during marriage, reviewing survivor benefits to make sure that they reflect changing realities in today's families, looking at the work to retirement transition, including the possibility of providing partial CPP pensions during that period. We will look at British Columbia's proposal to expand CPP coverage up the income scale.

Canada's retirement income system is not alone in facing challenges from an aging population and increasing longevity. However, almost no other industrialized country in the world has done as much as Canada has to come to grips with these problems.

The government promised to make the retirement income system secure for Canadians. We are well on the way to doing it.

The CPP is one of the three pillars of our retirement income system. Old age security and the guaranteed income supplement also provide public pensions for seniors. We have taken action to make these programs secure and sustainable as well.

The new seniors benefit announced in the 1996 budget will consolidate the OAS and the GIS into one benefit, beginning in the year 2001. This new benefit is designed to help those most in need and will protect low and modest income Canadians.

The third pillar is tax assisted savings for retirement such as registered pension plans or registered retirement savings plans. We will continue to provide generous incentives for Canadians to save for their own retirement years.

In summary, all three pillars of Canada's retirement income system are being placed on a secure and a sustainable footing. Canadians can rest assured that the pension system, as they know it, can be counted on by them and by generations to come.

Mr. Speaker, it is a pleasure, speaking on behalf of my colleagues and the Bloc Quebecois, to respond today to the draft legislation to amend the Canada pension plan that was just introduced by the minister.

On the whole,, we welcome this announcement although, as usual, there are some aspects that give us cause for concern. We are very much aware, as the chief actuary of the plan has said, that the problems facing the CPP are fundamental and that without changes, the CPP fund will run out of money in less than 20 years. Without changes, contribution rates would have to increase from 6 per cent to 14 per cent.

I would like to go over briefly most of the measures contained in this draft legislation and comment accordingly.

One of the measures being proposed, the first one, is that anyone currently receiving survivor, disability or combined benefits and anyone over the age of 65 as of December 31 is not affected by the proposed changes. This is, of course, a pre-election measure, and we realize the minister does not want to give anyone the impression they will be affected immediately. However, those in the plan later on will be affected.

The second measure is that all benefits under the CPP will remain fully indexed to inflation. This is very good news. In this respect, the federal government is following Quebec's example. In fact, Quebec agrees with the federal government on this score. Only two provinces do not.

Every time Quebec has managed to defend its interests satisfactorily-we saw this in the harmonization of the GST, and we see it again today in this draft legislation-Quebec has always been among the first to agree with measures that support the interests of our citizens.

Measure number three is that the ages of retirement-normal, early or late-remain unchanged. There is no problem here, of course. The fund now is equivalent in value to about two years of benefits. With fuller funding, it will grow to about five years of benefits, and we agree with the minister that this will guarantee the system's viability.

Contribution rates will rise over the next six years to 9.9 per cent in 2003 and remain steady thereafter. This is another measure which, we believe, guarantees the system's viability in the long term. The basic exemption, the first $3,500 of earnings on which no CPP contributions are paid, will remain at the current level. There is no problem here either.

Retirement pensions will be calculated on the five-year average of the year's maximum pensionable earnings instead of the three-year average. Some criticism here. This represents a small loss for beneficiaries, since the five-year average will usually be slightly less than the three-year average.

Another measure is the improvement of the administration of disability benefits. In a recent report, the auditor general was critical of the way these benefits were administered and pointed to Quebec as an example of what should be done. Quebec was right again. We applaud the decision of the Minister of Finance to do things the right way. However, we will have to wait and see how this works out in the bill.

Another measure is that disability benefits will be indexed by prices instead of wages. Here again, we have a complaint. This penalizes beneficiaries to some extent, because prices tend not to change as quickly as wages.

New rules will be used to calculate combined pensions for people receiving both disability and survivor benefits or retirement and survivor benefits. This is very bad news.

Let us take the example of a woman receiving benefits after the death of her husband and who then becomes disabled. She is therefore entitled to disability benefits. Under the current plan, she receives both benefits. Under the new rules, there will be a limit on the amount she can receive. In real terms, it could mean she would receive $800 a month instead of $1,200. It seems unfair to penalize people who are in such unfortunate situations this way.

Death benefits will be equivalent to six months of pension or $2,500, whichever is less. At first glance, that does not seem to pose a problem.

More active participation will also be required. Eligibility for disability benefits will require a person to have contributed during four of the six years preceding an application for benefits. Another downer. We will have to see what the witnesses before the Standing Committee on Finance have to say about the consequences of this measure. At first glance, it looks like a good number of contributors will be dropped from the plan and will thus have paid for naught.

Canadians will also be receiving an annual statement from the Canada Pension Plan. This of course is a good idea. Canadians and Quebecers should always be given a statement of what happens in their files.

A federal-provincial examination will be conducted every three years instead of every five. We also agree with this measure.

As the minister pointed out, there are three pillars to the Canadian retirement income system: the Canada Pension Plan, the Old Age Security together with the Guaranteed Income Supplement, and the tax incentives for retirement savings, namely RRSPs.

Where the rub lies is with the second pillar. The Bloc Quebecois will vigorously oppose the proposal to replace these two benefits with a single benefit for seniors in 2001.

The finance minister's proposal discourages saving by penalizing Quebecers and Canadians who have put money away for their old age, because the benefit will be reduced by an amount proportionate to their retirement income.

The Bloc Quebecois promised to battle the federal government on this every inch of the way, provided of course that Quebec is still part of Canada in 2002.

The Bloc Quebecois' position on the third pillar, RRSPs, is outlined in the analysis of personal tax expenditures released by the Bloc in early February. We think it is not fair to Quebecers and Canadians for a $1,000 investment in an RRSP to generate $313 in

federal tax savings for those who earn more than $100,000, while the same $1,000 investment in an RRSP will only generate a $175 tax saving for someone earning $30,000 or less.

As an alternative to the RRSP tax deduction, we have proposed a $268 across-the-board tax credit; this is the only fair and equitable way to encourage all taxpayers to save for their retirement.

This pretty well sums up for now our reaction to the tabling of this draft bill. Naturally, we will follow it as it goes through all the different stages and will gladly offer comments along the way.

Mr. Speaker, today Canadians from coast to coast must be feeling a terrible chill as the shadow of the most regressive tax increase ever to hit our country has just been announced by the Minister of Finance.

Today the government announced the fact that it is going to be increasing the current Canada pension plan payroll tax from 5.85 per cent of earnings to 9.9 per cent. This is a huge increase in personal taxes, taxes that come out at the payroll, taxes that come out before income taxes are paid, taxes that come out even before Canadians get a chance to pay the GST. No matter how we slice it, this is a tax increase to Canadians.

If this were a pension plan, as people understand or contemplate pension plans, it may not be that bad, people providing for their future, but that is not what it is. For example, today if you pay 5.8 per cent of your salary in order to get a pension of $8,724.90 which is the maximum Canada pension plan, you would get $8,724.96 in pension. After the changes are made, you and your employer will have the opportunity to pay $3,193.36 to get the same $8,000. You are paying $3,200 a year to get approximately $9,000 in pension.

Does that make any sense? This is RRSP season. If the government were selling mutual funds, and the government said to each individual taxpayer: "We have this great new plan. This new plan means that you and your employer will get to pay $3,200 a year in premiums and for that you will receive about $9,000 a year", the taxpayer would laugh because it does not make any sense at all. That is the basic problem with this plan. It does not give to the person who owns the plan and puts the money into the plan, the individual Canadian, a balanced, decent and honest return on their invested money.

The government has said it is conscious of the negative impact that payroll taxes have on jobs. This is a historical fact. It is on record. The government has said and has evidenced that in recognition of that, it will reduce the employment insurance premiums by the magnificent sum of 10 cents per $100 of earned income.

To put the increase into context, this increase in payroll taxes is $4.10 per $100 of income. So the government giveth and the government taketh away. When the government taketh away, is it balanced? I think not. And there again is the problem. Canadians are taxed to death. We cannot look at any individual tax alone. We have to look at the cumulative effect on our economy. The tax grab is an anchor that sucks the lifeblood out of our economy.

When the payroll taxes go up for the individual and for the employer-as they will in this circumstance, after six years the tax will go up to $651.90 each-where does that money come from? The employer says: "We have been contributing $1,889.56 per employee annually but now we have to contribute $3,193.36. Where are we going to get that money? Can we raise our prices? No we cannot". We live in a competitive world. It shrinks profit. The shrunk profit means there is less money to reinvest in our economy. What does that mean? It means fewer jobs.

If we want to see what is going to happen to our economy as a direct result of this tax grab because of the fact that we have mismanaged the pension funds over the last 36 years, just watch the unemployment rate rise after this kicks in. What is going to happen? Businesses are going to do the only thing they can do in order to get by. They are going to lay off staff because there is no other way to get money. How can businesses survive when a government thinks of them as a bottomless pit of resources? It just does not happen.

The hon. member opposite used to be a highly placed member of the Toronto Dominion Bank. The Toronto Dominion Bank is going to look at all of those businesses and say: "Gosh, you have 100 employees. Do you realize you are going to have to come up with some $90,000 a year more just to cover the Canada pension plan premiums? Where are you going to get that money? More money will have to be injected into your business".

They businesses are going to say: "But wait a minute. We cannot automatically assume that business is going to increase so the only thing we can do is lay people off or not hire them". That is the problem with this. We must inculcuate a sense of fiscal responsibility within all governments.

When the government says to someone that it is investing this money on his behalf, I ask hon. members and I ask Canadians, what person in their right mind would ask a government that is $600 billion in debt to be his investment adviser? Only a government that is $600 billion in debt could say with a straight face to Canadians: "Give us $3,200 of your money each year and we will invest it for you. For that, after your retirement, you will get almost $9,000 a year". Give me a break.

Anybody investing in even the most moderate RRSP would know that a privately managed investment plan would return more than double the same amount over the same period of time. How can the government possibly look Canadians in the face and say that this is a good deal? It is not a good deal. It is a tragedy.

It is a tragedy for all Canadians because once again the government instead of facing reality is saying: "We can get ourselves out of this problem by increasing taxes". Every time you increase taxes, you poke another hole in the lifeboat of the economy. It makes it harder to keep our national finances in shape.

We as a government and governments all over the country have fiduciary responsibility to our children and to their children to live within our means. That does not mean sucking money out of the country by means of a payroll surtax to lend to other governments at below market rates and make ourselves look better today at the expense of future generations.

The government has no reason to be pleased about this tax increase which will negatively influence employment. It will be terribly detrimental to the employment of young Canadians, especially the most vulnerable young Canadians, those trying to get into the workforce for the first time.

There is no excuse for the fiscal mismanagement of our country, our pension plans and our money which has brought us to the situation we are in today.

Mr. Speaker, pursuant to Standing Order 34(1) I have the honour to present to the House, in both official languages, the report of the Canada-Europe Parliamentary Association on the meeting of the Standing Committee on the Parliamentary Assembly of the OSCE held in Vienna, Austria, January 16 and 17, 1997.

Mr. Speaker, with leave of the House, I move, seconded by the hon. member for Dartmouth, that the 55th report of the Standing Committee on Procedure and House Affairs, presented to the House earlier this day, be concurred in.

Mr. Speaker, I have the honour of submitting a petition signed by 44 constituents. This petition is timely, since the budget will be delivered in a few days and also because the Minister of Finance happened to be with us when it was signed. This petition points to the level of taxes on gasoline. The petitioners ask Parliament and the Minister of Finance not to raise the federal excise tax on gasoline in the upcoming federal budget.

Mr. Speaker, pursuant to Standing Order 36 I have two petitions praying that Parliament urges the federal government to join with the provincial government to make the national highway system upgrading possible beginning in 1997.

Mr. Speaker, I have a second petition signed by a number of constituents in my riding urging Parliament to dedicate significantly more resources for the support and development of scientific research through programs such as the MRC and NSERC.

Mr. Speaker, it is my pleasure to present to the House today a petition signed by 200 of my constituents who strongly support the community action program for children.

The petitioners stress that health promotion preventive programs like CAPC are a cost effective way to spend health dollars. They also point out that local and regional evaluation studies of P.E.I. CAPC projects indicate a high level of success.

With this in mind these petitioners call upon government to maintain the CAPC with its present mandate and with its present resources.